Polkadot Greenlights Referendum 1721, Introducing Elastic Scaling To Drive Network Growth And Innovation

In Brief

Polkadot passes Referendum 1721, marking the launch of Polkadot 2.0, which introduces elastic scaling, eliminates parachain slot auctions, and aims to enhance developer access, liquidity, and ecosystem growth.

Community of the Polkadot protocol designed to support multiple chains within a single network, Polkadot World announced that it has successfully passed Referendum 1721, marking the start of a new phase with the launch of Polkadot 2.0.

Previously, Polkadot’s parachain slot auctions had been a key feature, creating a period of growth when the price of DOT reached $55. However, the high costs associated with these slot auctions created barriers that prevented many developers and projects from entering the ecosystem.

As a result, without enough developer activity and liquidity, the price of DOT dropped sharply. This situation largely benefited large token holders and institutional investors who took advantage of high staking rewards, collectively earning close to $500 million annually, which further diluted DOT’s value.

Polkadot 2.0 was introduced by the community as a solution to these challenges, with a focus on addressing the core issue of the parachain slot auctions.

The goal was to reduce the obstacles that restricted participation. Key changes outlined for Polkadot 2.0 included the abolition of slot auctions, the introduction of support for Ethereum Virtual Machine (EVM) compatibility, the creation of more user-friendly applications, the enhancement of liquidity, and the reduction of staking rewards that previously benefited only a few large holders.

With the approval of Referendum 1721, Polkadot officially transitioned into 2.0, implementing elastic scaling alongside core time and asynchronous support. This update eliminates the need for slot auctions, providing developers with a more accessible and flexible entry point into the Polkadot ecosystem.

However, this is only the beginning of the 2.0 phase. Future developments are still needed, including full EVM compatibility and the introduction of more contract-based applications to expand the network’s functionality and appeal.

Polkadot Set For Key Milestones

Polkadot has also mentioned that the launch of the Polkadot Hub is expected to take place in mid-December.

At the same time, liquidity development is progressing, with a particular focus on ecosystem projects such as Hydration, Hyperbridge, and Bifrost. The true enhancement of liquidity is anticipated to come with the Polkadot Hub. According to earlier announcements, Parity plans to roll out the Polkadot Hub growth strategy in Q1 2026, which will include several liquidity-related initiatives.

In addition, OpenGov recently passed a proposal to implement a hard cap on DOT, which is scheduled for inclusion in the Polkadot v1.8.1 update. This change will reduce the annual inflation of DOT to 3.1% by March 14, 2026, lowering the yearly issuance from the current 120 million DOT to 50 million DOT.

In the announcement, Polkadot recognized that version 2.0 is still in its early stages, and the impact is not immediately apparent—similar to the initial launch of Polkadot 1.0, which started as a Proof of Authority (PoA) network. However, as the outlined developments continue, the platform is expected to undergo transformations, with noticeable changes anticipated by 2026.

Polkadot is a decentralized blockchain platform designed to support multiple blockchains, enabling them to work together and exchange data. Created by Dr. Gavin Wood, a co-founder of Ethereum, and developed by Parity Technologies, it facilitates a multi-chain ecosystem.

Polkadot 2.0 represents an upgrade to the original network, with the goal of enhancing its scalability and overall capabilities. While the initial version of Polkadot already featured a multi-chain framework with interoperability, shared security, and governance, Polkadot 2.0 introduces various improvements aimed at increasing scalability, decentralization, and user-friendliness.